Matthew Howard of Guardian Wealth Management reflects on a case involving a wealthy international client whose poorly-performing investment portfolio undermined his long-term goals.
Benedikt is a married 43 year old father of two who has been living in a variety of locations around the world for the last five years. Due to Benedikt's work he could very quickly need to move location at very short notice and because of this his existing investment portfolio, which he had established two years previously, had been given very little attention for some time and as such had suffered the adverse effects of the downturn. Benedikt was a very active and busy individual and his young family and a heavy workload meant he had little time to dedicate to his existing investments. Benedikt enjoyed spending time with his family and was an active member of his local youth football team, where he spent most of his Saturday's coaching the local team where his two young boys played.
His concern was that as he did not fully understand his investments and the fundamentals of where his money was invested, that his current portfolio value would continue to decline and that he was not experienced or knowledgeable enough to formulate a strategy that would enable his capital to begin to grow.

I was originally introduced to Benedikt by way of a telephone call to our Global Client Services Division. Benedikt explained to me during our initial conversation that he had a large portfolio of investments that he knew were not performing for him and wanted to know if we could take over the management of the portfolio.
Due to the nature of Benedikt's work he was based in an extremely remote location and could not find anybody locally to assist him with his portfolio. We initially had a brief discussion and decided that it would be beneficial for us to arrange a mutually agreeable time to discuss Benedikt's situation in greater detail.
At our initial meeting my primary goal was to understand Benedikt's individual situation and exactly what he wanted to achieve with his investments and his long-term goals that we had to work with. Due to the nature of working with expatriates every single client that I work with has very different goals and timelines. Firstly we spent some time together and completed a detailed Financial Planning Questionnaire which enabled me to understand his current situation, his needs and objectives and then establish his risk profile.
It very quickly transpired that Benedikt's investments not only needed to start growing consistently if he was to achieve his life goals, but that much of the capital invested held an extremely personal sentiment for him as it was gifted to him by way of an inheritance from his father.
Benedikt's long-term goal was to return to his home country within the next 10 years where he planned to start his own rental property business. Benedikt had very precisely planned his business model and specified that initially he would like to purchase a block of apartments and renovate them. After the renovation work was completed he then planned on renting the apartments out on a long-term basis. After this process was completed, Benedikt planned to increase his portfolio of property over the years that followed.
Benedikt's overall target amount that was needed to start this venture was a figure close to €500,000. The original amount that Benedikt had invested was €300,000 which was approximately two years beforehand, however due to poor performance and high exposure to market volatility his portfolio had decreased in value to €280,000.
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The purpose of our first meeting was to gather all of the relevant information relating to Benedikt's current portfolio and financial background, to understand the dynamics of investment and to then understand where the investments were failing him. Benedikt felt personally responsible for its previous performance so it was vital that he understood the current structure of his portfolio and how it was working before we could move forward. After gathering information on his existing investments it soon became very clear that his current strategy was extremely fragmented and weighted very heavily in high risk, specialist areas. It was only after explaining in detail to Benedikt the current structure of his portfolio and the fundamental way in which it was working that we could move forward in a constructive manner.
After understanding and discussing at length Benedikt's attitude to risk it became very clear that his outlook towards investment was that of a balanced/adventurous nature as he wanted the prospect of increased growth over and above a banking institution by investing in various equity markets, however he did not wish to take any additional risks by investing directly in emerging markets and small companies.
I explained to Benedikt that by holding his investments directly he was exposing himself to a number of issues including issues around his wife and family accessing the money in the event of his untimely demise and the sheer complexity of keeping track of everything from a Financial Planning point of view. Not a hurdle in itself but the complexity could hinder clear thinking.
Benedikt had numerous investments with a number of different providers, and as such it had been an incredibly difficult task to keep track of their performance and understand his current asset mix. We then discussed the potential benefits of consolidating his existing investments into a low cost offshore wrapper, where not only would all his investments be centralised but he would have the ability to easily view his investments all in one place - online. In addition, should the worst happen to him, we could guarantee that his wife and family were nominated as beneficiaries to the investments held and that we could ensure the capital grew in a far more tax efficient manner than he was currently experiencing.
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After detailing the above to Benedikt I also wanted to explain that there were far more diverse ways to invest than simply holding direct shares on an open market. I introduced Benedikt to the various offerings in the market place, including looking for non-correlated assets, mutual funds and some structured products, which offer an exposure to a basket of stocks and/or indices rather with European Barrier protection. We also discussed fixed income and fixed rate deposit investments which can also be utilised within the wrapper.
After careful consideration of the options available to him, we recommended that Benedikt should consider selling some of his existing investments as they were not aligned fully with his objectives or risk profile, while also transferring some 'in-specie' to the offshore wrapper. As Benedikt now fully understood the benefits and simplicity of the options available to him, he agreed with this recommendation and wished to proceed with our recommendations. After this process was complete we then recommended the most advantageous way forward for the remaining capital to be invested, with the object of generating growth for Benedikt, while also offering him far more capital protection then he had previously experienced.
As Benedikt's timeframe was initially set at 10 years we had a lot of time to plan ahead but to achieve the target amount of €500,000 with the readily available capital of €280,000, we forecasted that based on a return of seven per cent per annum it would take at least nine years to achieve his goal although Benedikt understood that this could not be guaranteed.
Benedikt was pleased at the prospect of potentially being able to achieve his dream of starting a new business and also looked forward to seeing his portfolio become more balanced and less risky with the potential to achieve his desired target amount of €500,000, even after the initial poor performance of his investment, in a shorter time frame than he thought possible. We then set about putting our plans in place and moved Benedikt's investments to an offshore wrapper. After this process had taken place we spent further time determining which of Benedikt's remaining assets were working effectively for him and how to re-align the cash that had been realised from the sale of the assets that were not working effectively in line with his objectives or risk profile.

What happened next
Benedikt and I have now been working together for a little over two years and we have seen his portfolio grow at a consistent and stable rate in excess of the targeted growth rate of seven per cent. Over this timeframe Benedikt has regained significant confidence in his investments, not only with the investment providers but also with myself and the industry as a whole, having originally lost faith in his previous adviser.
I provide my clients with regular reviews to ensure their investments remain on track with their individual needs, wants and aspirations. In addition this means we can react quickly to changes that happen in today's markets. By operating in this way I can be confident that my clients are always receiving the best and most appropriate advice possible for their individual circumstances which, given a large proportion of my clients are international employees, can change at a short notice. I am committed to providing
a continuation of support and high level of service, whatever direction my clients' lives take them.
Flexibility is the key and clients are safe in the knowledge that they can contact me at any point with any questions, queries or worries that may arise.

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